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Seoul to Review if DBS
Is Qualified for KEB Bid

SEOUL, South Korea -- South Korea's financial watchdog said Tuesday it must review whether DBS Group Holdings Ltd. is qualified to become the largest shareholder of Korea Exchange Bank.

DBS's largest shareholder, with a 28% stake, is Temasek Holdings Pte. Ltd., Singapore's state-owned investment company, which is registered as a nonfinancial company in Korea. Local banking regulations prohibit a nonfinancial company and its affiliates from taking management control of a bank.

An official in charge of banking-industry supervision at the Financial Supervisory Service said the agency must examine whether to consider DBS a subsidiary of Temasek by looking at whether Temasek has influenced DBS's management. The official said the agency will ask DBS for documents if it is selected as a preferred bidder for KEB.

The official declined to comment on how long the review might take.

"After the review, the Financial Supervisory Commission will make a final decision on whether DBS is qualified to buy the KEB shares," said a spokesman at the Financial Supervisory Service, which is part of the Financial Supervisory Commission.

The DBS Bank unit of DBS Group submitted a bid last week to purchase a 50.53% stake in KEB from U.S.-based Lone Star Funds, the current largest shareholder of KEB, competing with two Korean bidders, Kookmin Bank and Hana Financial Holdings Co.

DBS Group Holdings said it is "confident" about the outcome of its bid and will cooperate with South Korean regulators to prove it is eligible.

"DBS Bank is fully cooperating with the FSC. We will continue to provide the FSC with all relevant information that will confirm DBS Bank's eligibility as an acquirer," a DBS spokeswoman said.

Lone Star is expected to announce a preferred bidder for the KEB stake as early as this week.